Consumer Psychology lectures
Lecture 1: Intro & experiments
Consumption
- ‘’individuals or groups acquiring, using and disposing of products, services, ideas or
experiences’’ (Arnould et al., 2005)
- Examples of consumption decisions:
o Being in a hospital and enjoying the experience offered to you
o Using a AH loyalty card
o At a festival drinking and deciding to throw the cup on the ground
Consumer Behavior
- CB involves more than just products (e.g., going to the dentist, what TV programs to
watch, taking aerobics class, going skydiving, donating to a cause, etc.)
- CB involves more than just buying:
o Acquisition (e.g. leasing, trading, borrowing)
o Usage (e.g. symbolic aspects, usage patterns)
o Disposing (e.g. recycling, product durability)
Marketing management decisions are based on assumption regarding the psychology of the
consumer.
- How to design an advertisement
- How to decide the price
- Etc
If your assumptions are not correct, this has consequences on the buying behavior of your
consumers.
Why assumptions can be wrong?
- Conventional wisdom
o Consumers…
Are exclusively motivated by financial self-interest. That when a product is
cheaper than the competitive, people will buy your product. Is only true in
specific situations. People care for example about quality.
Perceive reality objectively. You assume that people are not biased..
Make conscious decisions. this assumption is not always true. Most of the
decisions are made unconsciously.
Benefit from unlimited choice more options is not always the best. Because
more options will make It more difficult for the consumer to choose.
Implications of conventional wisdom
- Consumers perceive reality objectively
o Warnings help to improve healthy decisions. E.g. the warnings on smoking packages.
- Are exclusively motivated by financial self-interest
o Promote energy conservation with monetary appeals. If you tell people they can save
money by saving energy they will adjust.
- Benefit from unlimited choice
1
, o Example: subway. You go to get a sandwich. Some people like to have a lot of choice,
some people just want a sandwich and don’t want that much choice.
Research: choice overload
- Can there be too much choice?
o Too much information to sort through
o More options, higher standards expectations go up. With 20 options, one should
be reeeeeally good. Higher chance that you get disappointed.
o Self-blame
- Jam experiment (Iyengar & Lepper, 2000)
o 6 jams: 30% purchase
o 24 jams: 3% purchase
Research: motivated by financial self-interest
- Promoting energy conservation
- Went to a gas station, tried out different signs with persuasive messages to try to
convince people to do a tire check. When you don’t have enough air in your tires, you
use more gas, so if then you pump up your tires you save money.
- Did people take the coupons to get a free tire check?
- The messages varied from financial argument, safety argument, environmental argument
and no argument:
- Results:
2
,- Nobody took a coupon when the financial argument was applied. While a lot of people
would think this argument would help. Therefore, this shows that your assumptions
could be off.
- Economic incentives work, but only if the benefits are large enough. People realized that
the money that they would save will not be that much, and therefore not do the tire
check.
‘’A prescription without a diagnosis is malpractice’’
- Socrates
Intuition is no basis for management decisions!
In sum…
- Insufficient knowledge of consumer psychology can lead to erroneous assumptions, and
bad management decisions!
- Predicting and understanding consumer behavior is important
o Inaccurate predictions means losing customers, not to mention decreases in well-
being!
o Good methodology necessary to develop knowledge (hour 2 of the lecture)
Lessons build op:
Understanding consumer psychology
In order to make informed management decisions, knowledge on consumer psychology is
crucial.
‘’This course aims to provide students a better understanding of the motives and cognitive
capacities that determine consumers’ behavior’’.
Findings in consumer psychology
- Consumer motives
3
, o Consumers are driven by the wide array of (social) motives (e.g. lecture 2 & 3)
- Limited cognitive capacities
o Our ability to make good/reasoned decisions is limited (e.g. lecture 4, 5 & 7)
Teaching method consumer psychology
‘’tell them and they’ll forget. Demonstrate and they’ll remember. Involve them and they’ll
understand’’. – Confucius.
To read the papers:
- Start with the beginning and end
- Go back to the middle, look at the graphs
- Understand: when the phenomenon occurs, why it occurs for the exam
Overview of dates
- Lectures
o Mondays/Tuesdays (! Pre-recorded lecture on April 25, no lecture om may 2)
- Tutorials
o 10/13 may (Tutorial 1: team assignment component A)
o 31 may/June 3 (tutorial 2: team assignment component B)
- Deadlines
o Component A 20 May, Component B 10 june
- Exam & resit
o June 28 & July 15
- See nestor course information for detailed schedule.
4
Lecture 1: Intro & experiments
Consumption
- ‘’individuals or groups acquiring, using and disposing of products, services, ideas or
experiences’’ (Arnould et al., 2005)
- Examples of consumption decisions:
o Being in a hospital and enjoying the experience offered to you
o Using a AH loyalty card
o At a festival drinking and deciding to throw the cup on the ground
Consumer Behavior
- CB involves more than just products (e.g., going to the dentist, what TV programs to
watch, taking aerobics class, going skydiving, donating to a cause, etc.)
- CB involves more than just buying:
o Acquisition (e.g. leasing, trading, borrowing)
o Usage (e.g. symbolic aspects, usage patterns)
o Disposing (e.g. recycling, product durability)
Marketing management decisions are based on assumption regarding the psychology of the
consumer.
- How to design an advertisement
- How to decide the price
- Etc
If your assumptions are not correct, this has consequences on the buying behavior of your
consumers.
Why assumptions can be wrong?
- Conventional wisdom
o Consumers…
Are exclusively motivated by financial self-interest. That when a product is
cheaper than the competitive, people will buy your product. Is only true in
specific situations. People care for example about quality.
Perceive reality objectively. You assume that people are not biased..
Make conscious decisions. this assumption is not always true. Most of the
decisions are made unconsciously.
Benefit from unlimited choice more options is not always the best. Because
more options will make It more difficult for the consumer to choose.
Implications of conventional wisdom
- Consumers perceive reality objectively
o Warnings help to improve healthy decisions. E.g. the warnings on smoking packages.
- Are exclusively motivated by financial self-interest
o Promote energy conservation with monetary appeals. If you tell people they can save
money by saving energy they will adjust.
- Benefit from unlimited choice
1
, o Example: subway. You go to get a sandwich. Some people like to have a lot of choice,
some people just want a sandwich and don’t want that much choice.
Research: choice overload
- Can there be too much choice?
o Too much information to sort through
o More options, higher standards expectations go up. With 20 options, one should
be reeeeeally good. Higher chance that you get disappointed.
o Self-blame
- Jam experiment (Iyengar & Lepper, 2000)
o 6 jams: 30% purchase
o 24 jams: 3% purchase
Research: motivated by financial self-interest
- Promoting energy conservation
- Went to a gas station, tried out different signs with persuasive messages to try to
convince people to do a tire check. When you don’t have enough air in your tires, you
use more gas, so if then you pump up your tires you save money.
- Did people take the coupons to get a free tire check?
- The messages varied from financial argument, safety argument, environmental argument
and no argument:
- Results:
2
,- Nobody took a coupon when the financial argument was applied. While a lot of people
would think this argument would help. Therefore, this shows that your assumptions
could be off.
- Economic incentives work, but only if the benefits are large enough. People realized that
the money that they would save will not be that much, and therefore not do the tire
check.
‘’A prescription without a diagnosis is malpractice’’
- Socrates
Intuition is no basis for management decisions!
In sum…
- Insufficient knowledge of consumer psychology can lead to erroneous assumptions, and
bad management decisions!
- Predicting and understanding consumer behavior is important
o Inaccurate predictions means losing customers, not to mention decreases in well-
being!
o Good methodology necessary to develop knowledge (hour 2 of the lecture)
Lessons build op:
Understanding consumer psychology
In order to make informed management decisions, knowledge on consumer psychology is
crucial.
‘’This course aims to provide students a better understanding of the motives and cognitive
capacities that determine consumers’ behavior’’.
Findings in consumer psychology
- Consumer motives
3
, o Consumers are driven by the wide array of (social) motives (e.g. lecture 2 & 3)
- Limited cognitive capacities
o Our ability to make good/reasoned decisions is limited (e.g. lecture 4, 5 & 7)
Teaching method consumer psychology
‘’tell them and they’ll forget. Demonstrate and they’ll remember. Involve them and they’ll
understand’’. – Confucius.
To read the papers:
- Start with the beginning and end
- Go back to the middle, look at the graphs
- Understand: when the phenomenon occurs, why it occurs for the exam
Overview of dates
- Lectures
o Mondays/Tuesdays (! Pre-recorded lecture on April 25, no lecture om may 2)
- Tutorials
o 10/13 may (Tutorial 1: team assignment component A)
o 31 may/June 3 (tutorial 2: team assignment component B)
- Deadlines
o Component A 20 May, Component B 10 june
- Exam & resit
o June 28 & July 15
- See nestor course information for detailed schedule.
4
